10 Things You Should Know About Commercial Vehicle Insurance

Things You Should Know About Commercial Vehicle Insurance

Published on June 18th, 2020

A major chunk of the Indian roads is taken up by taxis, autorickshaws, school buses, vans, etc. They are different from personal vehicles like cars and bikes.

They come under a different category of vehicles known as commercial vehicles.

If you own or drive any of these types of vehicles, then you must have a thorough understanding of what commercial vehicle insurance is.

Here are 10 things you should know about commercial vehicle insurance.

1. What Is Commercial Vehicle Insurance

A commercial vehicle insurance covers financial expenses due to damages and losses caused by a commercial vehicle.

Commercial vehicles include auto-rickshaws, cabs, school buses, tractors, commercial vans, and trucks, etc.

The policy covers losses due to accidents, theft, fire, natural calamities, etc. It also includes injuries/ death caused to the owner or driver of the vehicles.

2. Is It Mandatory To Have Commercial Vehicle Insurance

If you are the owner of a commercial vehicle or if you drive one, then it is mandatory to have the commercial vehicle insurance.

You must at least have a liability-only policy for your vehicle. It is mandated by the Motor Vehicles act of 1988. Without insurance, you will be liable to pay fine.

3. What Are The Different Types Of Insurance Policies

Commercial vehicle insurance can be categorised into two types of policies:

  • Liability-only policy – This is the minimum type of policy you must own as mandated by the Motor Vehicles Act. If your vehicle causes damages or losses to any other person’s vehicle or property, then those losses would be covered under this policy. If your vehicle tows another vehicle and in that process, if the other vehicle gets damaged, then that is also covered under this policy. If the owner/driver doesn’t have a stand-alone Personal Accident cover, then injuries/death caused to him will be covered. However, damages caused to your own vehicle is not included in this.
  • Standard package – Along with the benefits mentioned in the Liability-only policy, damages caused to your own vehicle due to accident, theft, fire, natural calamities, etc. will also be covered under this type of policy.

Increase The Scope Of Coverage With Add-Ons

You can further increase the scope of coverage of your Standard Policy with extra features known as Add-Ons.

Add-on can only be bought along with your standard policy, and it enhances the protection of your vehicle. Here are some of the add-ons provided by insurance companies :

  • Personal Accident cover for injuries/death caused to owner/driver.
  • Unnamed PA cover that covers injuries/death caused to co-passenger.
  • Legal Liability that covers any legal formalities if your employee sues you.
  • IMT 23 which covers losses or damages to lamps, tyres, tubes, mudguards, bonnet, side part bumpers, headlights and paintwork when your vehicle is damaged.
  • Electrical Accessories covers damages to electrical accessories fitted to the vehicle which are not initially a part of the model.
  • Non-Electrical Accessories covers damages to non-electrical accessories fitted to the vehicle which are not initially a part of the model.

5. What Amount Will The Insurance Policy Cover You For

The amount which your insurer will provide you when you file a claim is known as the Insured Declared Value(IDV).

This is the value for which you will be insuring your vehicle. When you submit a claim, then the insurer will reimburse you this amount minus a few mandatory charges.

For a liability-only policy, you cannot choose the IDV. Whereas for the Standard Package policy, you get to choose the IDV.

IDV must be set to the current market value of your vehicle. If you set a higher IDV, then the premium will be higher and vice-versa.

6. How Is The Premium Calculated

Premium is the amount that you have to pay to the insurer for the benefits they offer through the insurance policy. This premium is dependent on the following factors :

  • IDV that you have set.
  • Type and model of the vehicle.
  • Age of the vehicle.
  • Place of registration.
  • Fuel type – whether diesel of petrol.

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7. What Is Covered In Your Insurance Policy

With the Standard Package policy the following scenarios will be covered:

  • Damages caused to your commercial vehicle due to accidents.
  • Damages caused or complete loss of your vehicle due to theft.
  • Damages caused due to fire.
  • Damages caused due to natural calamities.
  • Personal accident cover for owner/driver.
  • Damages caused to third-party’s vehicle or property.
  • Damages caused to another vehicle being towed by your commercial vehicle.

8. What Is Not Covered In Your Insurance Policy

Under certain circumstances, you will not be able to file a claim with your insurer. They are :

  • Damages to your own vehicle if you have a liability-only policy.
  • Damages caused due to driving under the influence of alcohol.
  • Damages caused due to driving without a valid driver’s license.
  • Damages due to contributory negligence of the driver.
  • Any damages that are not a direct result of an accident.

9. What Are The Different Types Of Commercial Vehicles

The commercial vehicles can be categorised into the following types.

  • Passenger carrying vehicles such as taxis, cabs, auto-rickshaw, school buses, private buses, etc.
  • Goods Carrying Vehicles such as trucks, tempos, and lorries.
  • Heavy-duty vehicles such as cranes, forklifts, and farming tractors.

10. How To File A Claim With An Insurance Company

As soon as any damages or mishaps happen, call your insurance company immediately and intimate them of the issue.

Depending on the insurer, you will be sent an online link where you can upload the photographs of the damages, or the insurance company will send in an examiner to analyse the damages.

Once the company is satisfied with the analysis, they will reimburse your IDV amount or will pay on your behalf for repairs at the selected garages.

In case of theft, you will have to report to your nearest police station first. Only after filing an FIR and concluding that your vehicle cannot be retrieved can you file your claim. You will have to provide a copy of the FIR.